Mallya vows cash infusion

Mumbai, Dec. 17: Kingfisher Airlines promoter Vijay Mallya today informed a consortium of lenders that he would infuse Rs 425 crore into the carrier to help it restart operations in a phased manner.

Though Mallya did not provide details on how he would arrange the funds, speculation is rife that the money may come from United Spirits Holdings.

Last month, Diageo Plc had reached an agreement to acquire a majority stake in United Spirits for over Rs 11,000 crore. Of this, United Spirits will get Rs 2,400 crore. Though Mallya had said the sale proceeds would not flow into Kingfisher, it is now believed that over Rs 400 crore may come from the holding company.

Kingfisher is also in talks with investors, including Etihad Airways, for equity funding. The airline has recently capped investments by foreign institutional investors (FIIs) at 3 per cent to facilitate FDI of up to 46 per cent in the carrier. At present, foreign investment, both FDI and FII, of up to 49 per cent is allowed in domestic airlines.

The airline owes around Rs 7,000 crore to a consortium of 17 banks led by the State Bank of India.

Kingfisher spokesperson Prakash Mirpuri today said the airline would bring in funds on its own to resume operations. “We have not asked banks for any support. We have also shared a full recapitalisation plan, which will be further discussed with a small designated group of bankers,’’ he said.

After meeting Mallya today, SBI deputy managing director Shyamal Acharya said Kingfisher would soon begin talks with the Directorate General of Civil Aviation on resuming operations.

“They have a plan to restart operations. Only if it starts flying, will the money start to flow in. The plan depends on certain clearances. So, a small group of bankers has been constituted to discuss the nitty-gritty. The promoters will provide funds on their own,” he said.

Acharya said the sale of the company’s non-core assets was not discussed in the meeting. The group of banks being appointed to monitor Kingfisher’s return to the skies include the SBI, Bank of Baroda, Bank of India, the United Bank of India and IDBI Bank.